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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: koan who wrote (90533)	11/19/2008 4:00:04 PM
From: benwood	3 Recommendations Read Replies (2) \| Respond to of 116555

The foreign cars will go up in price at some point thanks to a collapsing dollar. The dollar revaluation will, in my opinion, create investment opportunities in the US again. But if taxpayers are saddled with debt to corporations which were propped up, then there will be no investment capital available for the enterprises which could in theory make an actual profit. It isn't just the auto companies of course -- Wall Street has already sucked up a trillion dollars. But I see the auto companies needing 100 billion just through 2009. How we choose to play this out remains to be seen, but the adjustments will come regardless of our attempts to thwart it. The push-it-into-the-future game has been played for well over a decade, starting with 'no payments for 30 days' evolving into 'no payments for 30 months,' pulling sales forward for years (autos), stacked loans (autos), war (debt to China), stimulus (debt to China), policies to encourage oil consumption (e.g. tax credits for Hummers; wars). We are in the realm of "When?" now not "If..." The dollar in my view will be the way in which prices for many things we consume jump in price, even as we deflate, coming sometimes from factories exported in the 90s and this decade. And coinciding with the dollar drop, there will be a jump in interest rates even if the Fed monetizes. Or I should say "as" they monetize. An irony that doesn't escape me but does most Americans is that the social system in Denmark does cost quite a bit -- people are taxed much higher, and willingly. And they rank as the happiest people on earth. Here, there's a huge backlash against letting the little guy get something for nothing (hence the misleading 'wealth redistribution' panic last month). But the redistribution on a massive, macro scale continues. People are okay with that for the most part. I know many who wish for more. But we won't end up with what Denmark has. We are going to have the biggest hangover in history. Not as bad as Iceland, which was really a fly swatted down, but more like a herd of buffalo shot one by one from a train of great white hunters.